New Bill Would Completely Change Mississippi Car Insurance Setup

A bill introduced this week to the Mississippi Legislature would make sweeping changes to the state’s financial responsibility laws and establish a much more complicated auto insurance system in which motorists could opt to purchase a personal injury protection (PIP) policy instead of standard liability coverage.

The authors of the bill say that the changes would afford consumers more low cost car insurance choices when it comes to deciding on the types of coverages they want to buy. But the scenarios outlined in the bill foreshadow complicated coverage decisions for motorists and complex claims processes if it is signed into law.

The Current System

Mississippi currently has a tort system in which drivers purchase coverage that goes to pay for other people’s damages that were caused by the policyholder.

So when drivers get into accidents that are caused by another person, they are dependent on the liability policy of the person who caused the accident for compensation; and they will be able to collect compensation only up to the at-fault driver’s policy limits.

The bill’s authors note that this means accident victims’ recovery of compensation is limited by factors that they have no control over.

“The recovery is dependent on, among other things, the conduct of the other driver, the amount of liability insurance (if any) carried by the other driver, and the financial resources (if any) of the other driver,” the bill states. “Under the current system, two individuals who have received identical injuries may recover markedly different amounts.”

Liability-only coverage also provides no coverage for the policyholder in single-vehicle accidents or in crashes caused by an uninsured, underinsured or hit-and-run motorist.

The Proposed PIP Alternative

To remedy this situation, lawmakers are aiming to give drivers the choice to purchase PIP coverage instead of “being forced” to buy a liability policy “to protect strangers.”

Basic PIP policies outlined in the proposal would provide up to $15,000 in coverage that includes:

  • Compensation for medical bills that do not exceed the chosen PIP policy limits
  • Compensation for loss of income (up to $200 per week)
  • Compensation for replacement services (up to $100 per week)
  • A death benefit of $10,000

PIP policies would still come with $10,000 in coverage for property damage caused by the policyholder, and motorists would have the option of beefing up coverage limits.

Bill Would Establish a Dual System

While most states that allow drivers to purchase PIP also require them to carry liability coverage to pay for damages that they cause, the Mississippi proposal would amount to a dual system in which PIP and tort liability operate side by side.

But what happens if a person who chose the PIP option causes a crash in which the other party is injured and has no PIP coverage of their own? Would they have no insurance coverage?

The bill says that, in this scenario, the victim’s own liability coverage would defy the standard provisions of a liability policy and pay for the policyholder’s own damages. This is called “tort maintenance coverage,” and it would kick in only in instances where the at-fault party has only PIP coverage and the not-at-fault party has only liability coverage.

When both drivers in an accident have PIP, each of their policies would pay for their own damages.

Motorists would be able to sue the other driver for uncompensated economic loss if their losses exceed the limits of their PIP or tort maintenance coverage policies.

When both drivers have only liability coverage, the claim would be handled the same way it’s handled in the current system.

Tort Maintenance Coverage

Establishing a system in which standard liability insurance reverses itself and pays for the policyholder’s own damages when the at-fault driver has no liability coverage is not a new idea.

At least Massachusetts, Hawaii, Louisiana and Colorado have submitted bills to establish similar systems–all of them failed–and attempts to introduce a dual system in Mississippi go back to at least 1998.

Around the late 1990s, lawmakers at the federal level were even including tort maintenance coverage in their proposals for nationwide tort reform.

It remains to be seen whether the radical changes proposed in the bill will be taken seriously by other lawmakers.

Three of the biggest states that require drivers to carry PIP–Michigan, New Jersey and Florida–are all scrambling for reforms to change their systems. While PIP was originally heralded as a cure-all to expensive and widespread litigation after car accidents, many drivers still sue when their damages exceed PIP limits, and PIP is turning out to be a boon for many unscrupulous individuals trying to game the system.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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